 Hello and welcome to a live tutorial Tuesday where we will be working a problem in both Excel and QuickBooks. We'll be looking at it in terms of both theory, in terms of recording journal entries with debits and credits, and then we'll go into it in more detail with terms of software, which is something that's often used in practice, and that's always a question that people have, whether they be students or if they be from the work environment. Both sides ask the same question often times when learning accounting principles from different angles, from different aspects of the spectrum. Students often looking at the journal entries that we are putting into place and asking, how does this relate to the software when I start working? I know this is going to be in the software somehow. How much of it is in software? How does it work in the software? What do I need to know in terms of debits and credits when working with software? I often work with people that are in the accounting field as a CPA, working with people that work with bookkeeping and small businesses on the other end of the spectrum and their perspective is, look, I'm in business to do this and to make money. I know that accounting is important and I'm using the software. How much of the software can the software do for us? And how much knowledge in terms of accounting do we need to know in order to work the software, to get it to do what we need to do? Both aspects asking the same questions in terms of how do I get the software and the accounting to do what we need to do in practice. In terms of learning accounting, oftentimes what we end up doing is saying, first we want to know the basics. We want to learn debits and credits. That's traditionally how we start. And then we go into the aspects of how is that going to go into a database program? What do we need within the database program? It takes a bit of waiting and to see how these two things relate sometimes when we first start out. We're going to start here by doing these same things side by side and hopefully relieve some of that stress of waiting to see how these things apply to software when we go forward. That's going to be the objective here. This is going to be part two, so we had part one last time. If you weren't here last time, that's okay. We're going to start fresh from this point forward and we'll have a new worksheet. You won't need to have seen the prior lecture in order to do this. However, they do link together. And if you want to go to the prior lecture, it was recorded. You can take a look at that now or at a later time. But to move forward from here, we don't really need that. We could move forward. So before we jump any further, I'm going to take a quick break here and show our first comic and just check everything out and I'll be right back. All right. So our objectives, the objectives will be, I'm going to put this, I'm going to switch the display screens here. And what we are trying to do is record and post the startup journal entries. Now, we recorded the complete startup journal entries last time. We're going through basically the first month. These are going to be the standard transactions that we're going to have from month to month, paying the utility bill, paying payroll and these types of activities. We're going to be recording those types of activities. Then we're going to enter startup data into QuickBooks. So we're going to put this same stuff kind of by hand. That's what Excel is. It's going to be the equivalent of doing it by hand, the theory of the debits and credits. Then we'll put the same information into QuickBooks. I'm going to put it into QuickBooks as easily as possible. So I'm going to use the check register as much as possible. And the idea here, I know not everybody has QuickBooks, but the idea is to just give an idea of what QuickBooks would look like. How are we going to put the same information into QuickBooks? Now, as we work through this problem, you're going to see that there is a link below this during the presentation. Only one is going to go to the Excel document. So if you wanted to go to the Excel document, you can work through this as we go, or you can watch this and work through it later. You can rewind as we go. I highly recommend doing the transactions, of course, because that's the best way to really get this stuff. Also, have a backup of the QuickBooks file. Now, again, I know not everybody has QuickBooks software. You would need QuickBooks 2016 or later in order to restore the backup file. But if you don't have it, that's okay. If you do have it, you can put it in place. Again, the QuickBooks is there just to see what will happen from the theory to a software such as QuickBooks. Now, we're going to be using Excel. And as we do accounting, we might as well learn Excel because Excel becomes very important to different industries. Wherever you are in Excel or some kind of spreadsheet is becoming more and more important often Excel because everybody works with database programs. Everything's in data, whether you're in sales, whether you're in marketing and accounting. You're going to have some type of data in a database program. And if you know how to export that data to Excel and then sort it, that's going to be really useful. So the fundamentals of Excel, Excel is huge, obviously. The fundamentals of Excel, you can really learn from working problems like accounting. So it's really beneficial both for understanding accounting and for understanding Excel. Two things that are going to be very important, whether you work in the accounting department or not. So those are going to be the objectives as we go through these in terms of debits and credits, in terms of the theory. I'm going to go through a set of questions to try to, you know, not fall into any pitfalls that people tend to fall into when learning this stuff. This is going to be our cheat sheet that we have here. So the cheat sheet is going to be a T account. And at some point we can keep referring to this, but we just need to memorize this. And I'm going to keep asking questions related to this. And we need to know that the normal balance for assets, asset types, accounts are going to be debits. The normal balance for credit, for liability type accounts, tend to be credits, are credits. And the normal balance for equity, which gets a little tricky because equity's got some parts to it, but the capital account or the net of all equity accounts, hopefully, is going to be a credit, meaning that assets minus liabilities has a credit. And then the revenue, the income statement, is going to be a credit normal balance. And the expenses are going to be a debit normal balance. We kind of need to have a cheat sheet or know that, so that when we go into the next step, how do we make these go up or down? We can apply a simple rule in order to do that. Now, if you don't have this down, the second best cheat sheet, which we will be using, is a trial balance. So you want to have the trial balance open, which we will have and we'll keep on referring to. I recommend having a trial balance open all the time. Once we know that, we're going to say, the same thing will make it go up and the opposite thing will make it go down. This will make more sense as we keep repeating this a lot of times, but if it's a debit balance account, then the same thing will make it go up, a debit. If it's a debit balance account, then the opposite thing will make it go down, a credit. If it's a credit balance account, then the same thing will make it go up, a credit. If it's a credit balance account, then the opposite thing will make it go down, a debit. Again, I know that can get confusing if you keep on saying that, but we'll keep on repeating it with examples, and that's the best way to do it. So this is going to be the worksheet that we will be using. It can be a very intimidating worksheet, but we're only going to be working one cell at a time. We're going to be working very simple formulas. If you download the worksheet, I locked some of the cells, so you can't kind of go into a cell like this, because if you do go into a cell like that, what will happen is you can delete some of the formulas, and I don't want you to delete some of the formulas. So be aware of that, and lock them so that you don't mess the thing up. Mainly, we were going to be entering in the blue areas here, and we're just going to enter in the blue areas, and we're going to use very simple formatting to format back and forth between the worksheet. This worksheet, again, is available in the link below if you want to go down there and work with the problem or work it at a later time or just to take a look at the worksheet. You can do that. Also note that I put one in Google Sheets, so if you wanted to download the Google Sheets, that's in the link below. If you want to work the problem as we go, you can kind of do it in Google Sheets. Google Sheets doesn't have the amount of capabilities that Excel has, but it's more versatile in some ways, and it's free if you have a Google account. So it's really worth using whether you have Excel or not. Again, we're learning the fundamentals of Excel, which mainly Google Sheets can't handle. Obviously, the components of Excel go very, very deep. Nobody really understands everything about Excel because it does so many things. We've got to know what our niche is, but no matter what we do, the fundamentals are the fundamentals. Can we move around cells? Do we know basic formulas, and can we add and subtract cells? Those things we can clearly use Google Sheets with. So if anybody wants to log in there, you can copy this file, save it to your own document and work it later time, or you can work it live here. If people want to work it as a group, that's an option as well. Okay, so that is what we have there. And then the QuickBooks file will look like this. So I've uploaded a QuickBooks file. I don't expect everybody to download the QuickBooks file, but if you want to download it now or at a later time, it's there for you to do so. And so you can work through that and see what we have. We're starting from this point forward. So the data, as of the end of last time, hopefully is in there correctly at this point in time. I've got three sheets open. I've got the standard balance sheet profit and loss, which is an income statement and a trial balance open. And here's our trial balance on QuickBooks. And you can see that it doesn't have the zero balances. QuickBooks doesn't put the zero balances in there. But it's got all the other balances. And that should be the same as what we have over here in our trial balance on the Excel sheet. Okay, so that's where we're going to start. We're going to put this data then into this sheet. And we're going to do it both in Excel and in QuickBooks. We're going to take one more quick break before we move to that. So here's our next comic here. Is that the next comic? That's the same comic. I don't have another comic. There it goes. Anyways, hold on just a second. Okay, so let's work through this thing. So first item we have here, we're going to say that on 523, cash received from client for revenue earned in the past recorded in accounts receivable. So first I got the date and I know that I have first question I'm going to ask every time, is cash affected? And in this case, we're going to say it is because cash is received. So if I go into anything else, I could answer that and move from there. So I'm going to say 523 cash was received. Now cash is an asset. So assets we can see on our trial balance have debit balances by the fact that it doesn't have brackets in this instance. And therefore we need to make it go up. Therefore we're going to do the same thing to it, which in this case is going to be another debit. So I'm going to go ahead and copy this. Now I could type it in here. And that would be very easy to do. But I'm going to get in the practice of copying and pasting. So I'm going to copy this. So I'm going to do it right click and copy. I'm using a Windows program, obviously, and I pasted something funny. I'm going to right click and copy. And then I'm going to put it in H5. So here's H5. And I'm right click and I'm going to paste it. Not normal. I don't want to make it green, but values only. I'm going to paste it 123. So there is that. And we're going to put the amount then, which will be 1000 in the debit. I'm not going to do any formatting. I'm just going to type 10000. And when we select enter, it'll put the comma in there because of Excel will be formatting for us. I'm going to add this. And then we're going to have a credit of, I'm going to put the credits as a negative. Again, this can be confusing to some people, but no matter what you do, we've got to know that we're going to add and subtract debits and credits. So we're going to have to kind of differentiate those in our mind in some way or another. We're going to use credits as negatives in this worksheet because it's practical. It's useful. And hopefully I'll show you why that is and show you the practicality of it as we go. Negative 1000. When we select enter, it's going to put brackets around it and a comma so that it's formatting the cell for us. Now we just need to know what this cell should be. So in order to do that, let's read the rest of the question. We're going to say, from clients for revenue earned in the past, it's recorded in accounts receivable. So this was revenue earned in the past that's recorded in accounts receivable. Therefore, why are people paying us? Of course, we did work, earned revenue. So we might think it should go into revenue. However, we earned it in the past. And so again, in real life, we would know this. We would say they gave us a check for something that happened in the past. In a book problem, we got to kind of figure this out. How is the book going to tell us this? And they might tell us just that it's on account. So if it says it's on account, it means accounts receivable. So this $2,500 is receivable that's owed to us. We know we're going to credit it because we debited cash. Does that make sense? Well, accounts receivable is an asset and we need to make it go down because people no longer owe us as much money. Therefore, we do the opposite thing to it. And so it does make sense that we would credit it to go down. So I'm going to go ahead and put my cursor on L6, right-click and copy. I'm going to put my cursor on H6, right-click and paste it 123. Again, we could just type it in there, but I'm going to paste it 123. Now, if you want to put some nice formatting in there, you don't have to do this, but you can go to the Home tab, Alignment, and increase the indenting. Increase indenting. So instead of going in there and double-clicking like three times, you can use that button to do it. Just remember that there's a difference between being in the cell and being on the cell. You have to be on the cell, or else, if you're in the cell, you won't see any of the options here. Now, this is the general journal. I'm going to post that to the general ledger over here. So the general ledger is going to be in the same order as the trial balance, assets, liabilities, equity, income, and expense. We're going to post cash. So that's going to be our first account on the trial balance, first account on the GL. This activity is what we did last time. That's the activity that happened last time. I haven't put the dates in all the GL accounts because I'm trying to save some space for us all. So it's just going to be in chronological order. So I'm going to put my cursor in O15, which is the next cell to do this in. I want to do this with formulas. So I could type in 1000. I don't want to do that because I want to tie everything together because if there's a problem and everything's tied together, then we can go back and figure it out. So I'm going to say this equals, and then just point to this cell. So it equals I5. Equals I5. What's going to happen when we hit Enter, that 20,800, which is a debit, is going to go up because we're doing the same thing to it, to 21,800. We also see that 21,800 here. And notice the formulas now can tell us that we're out of balance because the debits minus the credits are out of balance. That's the benefit of using credits as negative numbers, which I hope we can see some usefulness that you got to kind of know what debits and credits are being represented as. Now we're going to take the accounts receivable, do the same thing to put us back in balance. It's our second account. It's going to be our second account on the GL. So here's cash. Here's accounts receivable. We're going to be down here in T10. T10 sounds like a terminator or something. So we're going to T10 and we're going to put this equals. I'm going to use the equals sign again. Point to that 1000. What's it going to do? The 2,500 is going to be doing the opposite thing to it, making it go down 1005 here, 1500 here on the trial balance, and we're back at zeros here. Now we're going to report the same thing and show how this will be happening in the QuickBooks. Now, of course, QuickBooks, there's a couple of ways we can do it. I'm going to try to do as much with the check register as possible. So because we selected cash, I'm going to use the check register. We might do it. I mean, obviously we would do it a different way, probably if we're trying to track receivables in a different way, but I want to use the check registers to make it as easy as possible. So we're going to go to banking. I'm going to use a register and check register. Now the register is an attempt not to kind of know debits and credits. We can just say cash is going up and down and whatever cash is going up and down, whatever the other account is doing, that's what the other account is doing. That's what QuickBooks tries to do. So we're going to say as a 523, we're going to say that we had a deposit because cash went in and it was from, let's see who it was from, L Williams. So I'm going to put in L Williams. We already have L Williams because L Williams was a customer before. So we're going to say tab and it's a deposit. So I'm going to make sure I'm on deposit time. That's not a credit in this case. It's a deposit. So that's why QuickBooks is a bit different. And then we're going to say it's 1000. In this case, I could have put it in as a journal entry, by the way. And then we're going to put it into accounts receivable. So that's the other account. So we're saying cash went up and the other account is accounts receivable. Just note that we also have to assign a customer, which is also L Williams, so that it can track the receivables. So then if we select OK, it posts that. Let's see if we what happens to the trial balance. We've got the 218 in the trial balance. And that's what we have here. And the accounts receivable went to 1005 and that's what we have 1005 here. And so it posts that out for us. Now, again, I realize that most people don't look at the trial balance when using QuickBooks. They're going to look at the balance sheet, which is also in balance because we can see that the assets equal the liabilities plus the equity. And we can look at the profit and loss and see that we just have that 6100 income. This was not income at this point because we didn't earn the revenue. We just received the revenue. We earned it in the past. OK, so let's go to the next one. We'll start going a bit faster, of course, as we go through these next item. We're going to say I'm going to highlight this and say that one's done. So I'm going to say that's done with a highlight. And we're going to say on 525, receive cash for work that has not been done. So work will be completed three months. OK, so we're saying as 523, we can say before we go on anything else, we received cash. So again, is cash affected? Yes, we received it. So before I go on anything else, even though it's not very well worded there, but we're going to say cash was received. I know that. I know what they're trying to tell me that. So 525 cash is our first favorite account. It's going to go up. It has a debit balance. How do we make something go up? We do the same thing to it, which in this case would be another debit. So I'm going to say cash, I'm going to copy the cash, put the cash on top, pasting it when it didn't copy. Oh, I did something funny. Undo our favorite undo button. Copy cash and paste it one, two, three, four, four thousand five hundred. And then I know I'm going to credit something four thousand five hundred. I'm going to represent credits with a negative for Excel purposes. Again, negatives doesn't mean credit. We're going to add and subtract credits. All right. And then what's that account going to be? Well, let's read this and see if we can figure out it. Receive cash for work that has not yet been done as well. Work will be done for the next few months. So we got paid and usually we would credit revenue when that happens. But when did we recognize revenue under the revenue recognition principle? When we earn it, we haven't done the work. Therefore, we can't represent the fact that we've earned it yet. So we have to credit something else rather than revenue. That's going to be what we call unearned revenue, revenue that we're going to earn in the future. Now it's a liability account. You can tell because it's orange and it's in the liability section. And we already know that we're going to credit it because we deputed cash. That's the beauty of doing cash first. Why are we going to credit unearned revenue? Does it make sense or unearned fees in this case? Same thing. And if we think it through liabilities as accounts payable here have credit balances. The bad thing is going up because we owe something in the future. We owe work or the money back if we don't do the work. And therefore we need to do the same thing to it, which in this case is a credit. So it does make sense that we're going to credit that. So I'm going to copy that. I'm going to put it on the bottom in H9. Right click and paste it one, two, three. Then I'm going to make it look nice going to the home tab. Alignment increase in denting. And there we have it. Okay. So now this is the general journal. We're going to post this to the general ledger. The unearned fees is how many accounts down 1234567892. I'm not sure I counted that correctly, but it's the last liability account, which will be the same from the trial balance to the general ledger. So we got the assets and the liabilities, but let's post the cash first. We're getting ahead. I'm getting ahead of myself here. So we're going to say cash. First account. Here's cash in P. And we're down here in 16 P 16. And I'm going to do this with a formula. I'm not going to type it in there. Actually, I'm should be on 16. It's a debit. And I'm going to not going to type it in there. I'm going to say this equals and point to this 4,500. When we hit enter, the 21 eight is going to go up by 4,500 because we're doing the same thing to it to 26 three. That same 26 three on the general ledger for cash is also on the trial balance for cash. We are now out of balance by the 4,500 because we have not yet posted the credit. Let's post the credit. So again, that's going to be the last liability account. So I'm going to go over. It's going to be the same for the GL. This is the general ledger or scrolling over. Here's all the assets. There's our liability accounts. We want the last one, which is going to be down here. And I know I'm scrolling through screens. And if some people, if you have good eyes, some people like to make the screen small to do this. So you can see it all in one place. When you do that, however, you're going to have to widen some of the cells in order to see it. I would rather scroll through. I know that's painful to some people and it's something you got to get used to or get used to something. You can also freeze the screens and use some other techniques. But in any case, we want to be down here in under revenue at AB 24. I'm going to say equals and then I'm going to use the scroll bar to scroll over to the cell I want to point to and connect it to this one. So equals this cell here and that is cell J9. So again, you could just type in like equals J9 and it'll point to it. But if you point and click, it really kind of visually gets you tied out there. So that is that. And then we're going to scroll back over here and we're back in balance and we can see that we owe now that 4500. So let's post the same thing now to QuickBooks and see how that might look. And again, I'm going to try to do everything in the check register or as much as I can in the check register. So we're going to say that cash. This is a check register for cash at 525. And that will be a deposit. And from let's see if I put a name here, L Brown. I'm not sure I need to be here. I'll just type in that we have L Brown tab. We don't have them yet. So we're going to say customer new quick add. And it's on the deposit side. So make sure you get deposit right and the quick on the right side. I messed that up in the last one on one just one transaction. Okay. And the amount is a bit high. There we go. All right. And then we have to put it to on earned. And again, I don't have that account. So if I select the dropdown, I don't see unearned. So it's really easy to add accounts in as we go. We're just going to say unearned fees is what we called it, which is a type of revenue. And we're going to say tab unearned fees would be our revenue account. This is a liability account, but fees earned is one type of revenue name that you could call revenue when your service company. Okay. It's going to say that it wants it to be an expense. And we don't want it to be an expense. So this is something we kind of got to know in terms of just theory to set up quick books. It's a liability. So we're going to go and it's we're going to say it's an other current liability. Now we're going to say same clothes and enter. And if we go to the trial balance, then we're going to say what happened cash 26 three. Is that what we have over here? I hope so. I hope it is. I'm going to say 26 three. That looks good. And then we're going to say that under and revenue is five thousand four. So I'm going to scroll back over here. Five thousand four under and revenue. That's correct. So we got that in both sides. And obviously people would normally be looking at the profit and loss. Notice I even though we got cash, no revenue is impacted. We can see that on our trial balance really easily too, because if you use these formulas, then you go down here and I just say it well credits minus the debits is revenue right there. Six thousand one hundred. And that matches what's on the income statement. And then the balance sheet, of course, is in balance. And we can see that we're in balance to 61 four of assets equals the liabilities and equity also 61 four. Now we can see that on our trial balance by just summing up the assets, the liabilities and the equity. Now if you look at those formulas, you'll see that I switched the signs a bit just to make it again, not debit and credits, but plus and minus. And so this formatting really tells us everything we need to know from a clunky more the financial statements are actually a bit more clunky. We can find everything we need to know just from this pretty quickly. If I want to know how many assets we have, I can just highlight them. There's my assets adds up to 61 four. How much are my liabilities? Well, they're right there. They add up to five thousand three hundred. What's my bottom line net income? Well, it's the credits minus the debits on the income statement, which we don't have any debits yet because we have no expenses yet, but six thousand one hundred. So we can get everything from the from the trial balance. Not everybody can. You'd have to know debits and credits to get it from there. Okay, so then we're going to do the next one here. Let's see what else we have. I'm going to highlight this one green. Say that one's done. That's green. Next one five twenty seven. We're going to say paid employees for salary incurred. So again, it says paid. And anytime something says paid, I'm assuming we paid with cash. So we're going to say cash is effective. Our favorite account cash is affected. It's going the wrong way, but you know, that's the way things go. So we're going to say twenty six three hundred cash has a debit balance. We need to make it go down. Therefore, we're going to do the opposite thing to it, which in this case will be a credit. So again, I'm going to do this by copying copying. I got to stop saying again. I'm sorry. Copy the head and we're going to put it underneath because credits traditionally go on the bottom right click and paste it one, two, three. Now we're going to post this out. So I'm sorry, I'm going to put the number here. The credits for a negative nine sixty. I'm going to put it in there as a credit. And then I know I'm going to debit something for that same about nine sixty. And now we just need to know what that amount should be here. What's going to be the amount. So if we go back to our question, we're going to say that we paid employees for salary incurred. Therefore, the other thing has to do something with salaries or wages or something. If we look at our try balance, which I always recommend you having in front of you when you work these, you can see you can go through here and say, hmm, how about I don't know salary's expense. Again, it could be called wages expense or something else, but we're going to put this salaries expense. It should be in the trial balance somewhere or the chart of accounts. Now we already know we're going to debit it because we credited cash. That's the beauty of doing cash first. Does that make sense? We'll see that all expense accounts have debit balances and they really only go up. They only go one way. The employee we pay the employee, the employee never pays us. So there are exceptions and we'll talk about those later. But for the most part, expenses only go up in the debit direction. Therefore, yeah, it makes sense that we're going to debit the salary's expense. So I'm going to go ahead and copy that. Paste it one, two, three on top in the debit section. I'm going to put my cursor here in age 12 in order to format this cell by going to the home tab alignment group and increase in denting. And there we have that. Now let's post this out. This is the general journal. We're going to post it out to the general ledger. Before I do that, I'm going to take a quick break here and be right back. Here's our comic for that. All right. So let's post this one out. So we're going to say that we've got the salaries expense. If we go through here, we can see that that's going to be our first expense, our second dark blue account. So if we go back over here, I'm going to say it's going to be the same from the trial balance to the general ledger. So we're going to go to the general ledger. I'm going to scroll over here. And we can do with the bar down here. And we're looking for the dark blue one. So here we go way over here in AI9. Not artificial intelligence, but the cell AI9. So we could just type the number in there. But again, I'm going to use the cell references. I'm going to use the cell references equals and I'm going to scroll over here, point to what we want to that 960 and enter. There is that. It goes up to that 960. And we can see the 960 there. We can see we're out of bounds by 960. Why? Because we haven't posted the other side, the cash side. So here's cash. We're going to post that. It's a top account on the trial balance top account on the general ledger down here on 017 is the next cell that equals pointing to whoop. I'm sorry. We need it in the credit side. P17 equals pointing to the credit. We got the 213 debit minus the 960 credit brings us down to 25340 25340 represented here. And we are back in balance there. All right. Same thing over to quick books. So quick books. We're going to go to is cash impacted right. And so I'm going to post this into the checking account as of 527. This is going to be I'm just going to keep the same check number. And we're going to say that it's going to be paid to now we this could be multiple employees. I didn't give an employee name here. I did give an employee name. Got one employee. Now obviously when we process payroll, a payroll can be a very complex journal entry because there's withholding and other things involved. We're doing a very simple payroll. We shook hands with our one employee. We told them we're going to pay him or her this amount. And we're just going to pay it. We're not going to deal with withholdings or whatnot. We'll deal with that at a later time. Okay. So we're going to put that in and we're going to say quick add. And this is an employee. And it's going to be for 960. Now, if we hit the drop down, we said, do we have any salaries expense or not yet? So I'm going to go over here and say, what did we call it? What do we want to call it? Salaries wages. We have some options. We called it salaries expense here. So I'm going to copy that. Make it the same. So it looks the same tab, set it up. QuickBooks guess is that it's an expense. QuickBooks is right this time. So we're going to say that's good and save and close and enter. Let's see if it does what we hope it should do. Let's go to the trial balance, trial balance. We see that we have 25, 340 cash, 25, 340 cash. And we have the cash down here. I'm going to fix that. And we've got salaries expense of that 960. Okay. And the salaries expense here should be 960. All right. And that's going to have an impact on the profit and loss. Profit and loss. Now we have an expense bringing the 61 down by the 960 to the 5140, which we can see over here represented by this amount here. Credits minus the debits. All right, let's go to the next transaction. Going to go back over here and we're going to say next transaction. Going to highlight this one. This one has been completed. So I'll make it green. Now we are on this one. 528 receive cash from clients for work done in past and recorded as accounts receivable. So again, before I look at anything else, I could say did we is cash infected? Yeah, we received cash. So on 528, we're going to say we got cash. Cash has a debit balance. And we need to make it go up because we're going to do the same thing to it. Therefore, we're going to debit the debit balance account. So I'm going to copy cash. Going to put it in each 14 right click pasted 123. The amount will be 1400. If we debit something, we're going to need to credit something. If there's only two accounts, which there are. So we're going to credit, I'm going to represent negative 1400. There is that. Now we just need to know what account that should be for. Why do we get cash? Well, normally it's because we do work and hopefully we got cash from the client. But we need to know when we did the work timing is important here. So receive cash from client for work done in the past. That means we did work in the past under the revenue recognition principle recognizing the revenue in the past when work was done. And therefore this time we can't put the credit to revenue. We need to reduce the asset, meaning the IOU from the customer of accounts receivable at 1500 needs to go down. We already know we're going to credit it because we debited cash. The beauty of doing cash first. Does that make sense? Assets have a debit balance in order to make something go down. We do the opposite thing to it, which is a credit. Therefore it makes sense for us to credit this to make the receivable go down. So I'm going to copy this receivable right click in cell H 15 and paste it 123. All right. And then I'm going to indent this to make it look nice. Home tab alignment and indent. So we have that. Okay. And then we can post this out. This is the general journal. We're going to post it to the general ledger. So the trial balance cash is the first account. Same with the general ledger. We're going to go to the next cell, which is now in 018. Oh, 18. I'm making it so you can see it a bit. Equals. And I'm going to point to this 1400. When we hit enter the 25, 340 will go up in the debit direction to 26, 740. Now we're going to post the other side. Accounts receivable. Second account here. Second account here. We're going to be in T 11. Equals. And we're going to point to that 1400. This is a debit of 1500 minus that credit. The credit being the opposite thing, making it go down to 100 is left over yet. So we're going to go back to this client. Say, you know, we use still over $100. All right. And now we're going to do the same thing. Now we're back in balance over here. And we're going to do the same thing over in QuickBooks. And we're going to say that I'm going to do everything I can with the check registered to make it as simple as possible. So now we are on 528. We have a deposit. The deposit is from L Williams. And notice when we do the journal entries, we don't really need to know it's from L Williams. But for practical purposes, we want to track that. And QuickBooks will force us to know that so that it will track it. It won't let us post it if we don't. And now we're going to go in the credit and it's going to be 1400. And where is it going to go? Accounts receivable. Whenever we post to accounts receivable, we have to make sure we have a customer or QuickBooks will not let us post it so that it can track how much is owed from that customer. So there is that. Now we'll go back and see what the reports look like. So if we go to the trial balance, we have 267.40. And that 267.40 should also be here. 267.40. And we've got the receivable is now 100 is all that's left. 100 is left there. All right, no effect on net income from that transaction because we didn't earn it at that point in time. We earned it at some point in the past. Next transaction. Let's go ahead and make that green because it's been done. It's going to be 529 paid cash. So I'm not even going to read the rest of it and just say, oh, paid cash. Well, before I know anything else I know is cash affected. Yeah, it went down. So 529 here 529 cash has a debit balance. We need to make it go down. Therefore, we're going to do the opposite thing to it, which in this case is a credit. So I'm going to copy cash. I'm going to put the credit on the bottom because cash typically goes on the bottom just out of tradition. Right click and paste it to 123. The amount will now be a credit negative 480 and enter formats for us because Excel does the formatting. If we credit something, we also need to debit something debit going on top. Same amount 480. What should the what should the account be now? And let's look at our question. We're going to say we see for the electric company. So we paid the electric bill. Now we could put a few different things that we could say electric bill. And if we want to track the expense separately, we could say that or we could just put it into a more generic account. What we want to do is see what happened in the past. And if we look at our trial balance or our chart of accounts, we see utilities that seems reasonable. So we're if we don't see anything else that says electric bill. If we can't see what happened last time, it's reasonable to us for us to assume and to be consistent by continuing to post it to utilities. We already knew it's going to be a debit because we credited cash. But does that make sense? Well, all expenses have debit balances and they really only go up utility bill never pays us. We pay the utility bill. Therefore, we're going to do the same thing to it, which in this case would be a debit. I'm going to copy that, put that on top in cell H17 by right clicking and pasting 123. Oh, what did I do with the format? Okay, and then here I'm going to go to the home tab alignment and indent. So here is our general journal. We're going to post that to the general ledger. The utilities first utilities is way down here in the trial balance. That's the last account. It's going to be the last account on the GL as well. So I can just scroll all the way over to the last account on the GL way over here. Right. And it's this one way down here. It's going to be a debit. So I'm an AM 21 way over here and I could just type it in there. I couldn't put in for 80, but I want to do it with a cell reference. So we're going to say this equals and I'm going to take a scroll bar and scroll all the way back over here. So I can point and click and just get it in my head that that is going there. Right. And that makes this account to go up. And because that account went up this just let me show you what cell references can do. Formula and you can't do this because I locked your sheet. That's one of the problems with locking it. But sorry about that. But this cell goes here and here. So we can see it's all linked together. And the more links we have usually the better. So you want to link it all together. If there's a problem, then we can figure out what happened through the links. For example, why are we off by 480? Why did that change? Okay. It's because this one's not going anywhere. It doesn't have a link. This one does have a link. So we know that's not the problem, most likely. The problem is here. So to fix that problem, we're going to post cash cash is right here. We're going to go to the next open area in P 19 equals point to that and say that's a debit. This is a credit. Therefore, the debit balance is going to go down by 480 to 26 to 60 that amount being on the trial balance as well. Okay, let's post that same thing into quick books. So quick books going to do as much as we can from the check register. I'm going to say 529. I'm just going to keep the check number. And I think we named the electric company something very creative. Electric company. I got to work on my. My team needs to work on the creativity here. Okay, so we're going to say add quick add and vendor. And that is going to be for 480 and tab. And again, do we have a utilities expense? No, because it's our first month after we put it in there one time and it'll be in there all the time. But we're going to put in utilities. If we can spell it right. We're going to put it in there even if we don't spell it right. And it's going to ask for an expense. That's going to be the type of account. Is that correct? Quick books is correct with that. Estimation and enter. Save it. Check it. Trial balance. Refresh. And 26 to 60 here. 26 to 60 is what we have. And then we have the utilities. 480 there. And 480 here. Now, again, just to just to verify where we're going and where we're at. If anybody's jumped in here. Note that we're just doing the same thing by theory in terms of posting debits and credits and trying to show the QuickBooks at the same point in time. If you want to work this at the same time, you can download the Excel sheet, which is below in the description during the presentation. And you can also work it live using Google Sheets, which is another link down below. I don't expect everybody to be working in Excel, but in QuickBooks. But I have included a backup in QuickBooks. If you would like to do that, you would need the software in order to do that. But the idea is to show how the software and the theory are related as we go to answer questions, both in terms of students who often learn theory without software first and then also small business professionals or business professionals who often use software before theory. And they typically have the same question. How do these things tie together? So we're going to try to tie it together as we go. Note that our net income now is here. We've got revenue, credit minus expenses for net income of income 4,660. If we go here, we go profit and loss, the income statement for QuickBooks, is revenue minus the expenses 4,660. So we are on track. It looks like we've got three more transactions and then we have to stop because that's all we got. And so we have to enjoy these last ones. So let's see what we have here. 530. I'm going to make this one green because that one's done. So I'm going to make that green. I'm going to put this one on top. And we're going to say paid cash to telephone expense. So again, before even reading anything, paid cash, what do we pay with cash? So it's cash affected. Yeah, cash debit balance. We need to make it go down. Going to do the opposite thing to it in order to do that, which is a credit. Going to copy cash. So yeah, if we just keep on repeating, I'm going to put it below. I haven't put the date yet, but the date's going to go there. I can imagine that and I'm going to put it below right click and paste it 123. Then I'm going to put the date, which is 530. Then I'm going to put the amount, which is in the credit side of 300. Then I'm going to assume that we're going to have a debit of 300. Journal entries always needed equal debits and credits. And if there's only two accounts affected, then we need a debit of 300. Then I'm just going to need that account. What will that account be? Let's go back to the problem. Why did we pay cash for the telephone expense? Now again, we want to do what happened last time. So we're going to look at our charter accounts and say what account represents telephone expense? Probably going to be in the expense area down here. But what did they call it? Normally we would call it telephone expense, but I don't see that. And if this isn't the first month, maybe they put it into utilities expense. Now I just want to show you that just because what we want to do is copy what happened last month. So we have consistency. And whenever we change bookkeepers or change people within the department, they always going to want to put their own new charter accounts in there. But as much as possible, when you go in, you want to have it consistent unless it doesn't make sense. And then you want to break things out. And so in this case, if they put the telephone into utilities, I'm going to keep doing that until we come to the decision that we should break out the telephone. So I'm going to say, okay, we'll put it there and paste it in H20, right click and paste it to 123. Then indent the H20 and go back home tab, alignment, increase indenting. And you might not be able to do this, by the way, because I locked the sheet. So just be aware of that. There's certain things you can't do, but I'm trying to save you the pain of deleting formulas on the locked cell. So that's why we lock them. All right, now we're going to post this. Now, again, the utilities is way on the bottom on the trial bounds and therefore will be way on the bottom of the general ledger. So I'm going to go way over to the other side again to post this. I'm going to go way over here down to the last one. We already got the 480 for the electric. We're going to put the phone right underneath it in cell AM 22. I'm going to do it with a formula by saying equals using the scroll bar scrolling way back over here and pointing to the one we want in I 20 and enter. And again, if you can do that, you can really visualize what you know what is happening here. And that of course changed itself from 480 debiting the expense accounts as expenses always are debited going up in the debit direction bringing net income down. We can see that 780 as well. If we scroll back over here, there's the 780. We're out of bounds by 300. Why? Because we haven't posted the other side being cash. Therefore, let's do that. We only got like two places left for cash. So cash is going to be down here. And I'm going to put it in P 20 and say that that equals and point to cash of 300 and enter. So that brings the amount from 26 to 60 down by 325 960. All right. So now let's do that same thing in QuickBooks. So going back to QuickBooks, we're going to say the cash account and we're going to say as of 530. We have utility is I'm going to keep that and do it. Did we name the utility company? Oh, I have an actual company name at least. That's interesting. I didn't call it telephone company. All right. And then tab and QuickBooks vendor. We're going to add it for the amount of 300. It's an expense and it's going to go to we put it to utilities. Utilities. That's what we did and enter. Now let's check the trial balance and we're saying cash now 259 60 cash over here. Cash over here is 259 60 utilities at 780 and net income 4360. So we're going to go back over here. Over here utilities 780 go to the end note. We can't really figure out what the net income is as easily will be the credit minus the debit minus the debit. So this worksheet actually works a little bit easier. Well, it's that that's that income right there. It's income not expenses credits are winning. But here we go to the profit and loss and say profit minus expenses 4360. All right. So it looks like everything is tying out as it should, which is nice. Therefore, we will go to the second to last one here and we're going to say that this one is done. So I'm going to make it green. Go to the next one and that one says receive services recorded services provided, but for which cash has not been received. So we did work and I mean our first question is cash affected. No, we did work. Didn't get the cash yet. So now that cash isn't impacted in this one, we need to say, well, what are we going to do then? If we didn't get cash, but we did work, I'm going to argue that we did get something. What did we get an IOU just like if you go to work and you get your paycheck at the end of the week. If you went in on Monday, you get paid on Friday, they owe you money. That's worth something. We can depend on that. So hopefully, so therefore we're going to say we got something. We got a receivable here. So it's an asset. It's a claim to hopefully cash that we're going to or something that we're going to receive in the future. It's our second favorite asset. I'd rather have cash, but having people owe us stuff is kind of good too. It's a good thing. So we're going to say that it has a debit balance and we got more of it. People owe us more stuff. Therefore, we're going to do the same thing to it, which in this case will be a debit. So we're going to debit that. I know I haven't put the date, but I'm going to paste it 123. Then I'll put the date of 530 and the amount of 1003 in the debit section and the credit of a credit. That's negative 1300 because every transaction has an equal number of debits and credits. Then we just need to know what that account should be. So what should that be? Well, why are people going to pay us? Because we did work. And whenever we do work under the revenue recognition principle, that's the point in time that we should record the revenue. So the other account is going to be revenue in this case. We're going to record the revenue at this point in time. We already know that we're going to credit it. Does that make sense? Well, if we look at a trial balance, we can see revenue has a credit balance represented by the brackets. And it only goes up. Customers only pay us. We don't pay the customer unless there's a refund or something kind of funny happens. So revenue only goes up in the credit direction. How do we make something go up? We do the same thing to it, which in this case is another credit. So it doesn't make sense that we will credit that. So I'm going to copy this, paste it 123 and H24, paste it 123. And then I'm going to indent home tab alignment, increase indenting. And then we can post out this journal entry to this general ledger first with accounts receivable. Second account on the trial balance. Second account on the GL. There it is. I know we're scrolling around screens. I hope that's getting more used, you know, we're getting used to that. We're going to say in S12 equals, we're going to scroll to the end and scroll down and there's the receivable. 1,003 debit that makes our account go up in the debit direction from 100 by 1,003 to 1,400. There's the 1,400 here. We are out of balance because we have not yet posted the revenue, revenue being the first dark blue account on the trial balance. It will be the same on the general ledger. Let's scroll over and find that dark blue account, which is in the same order as its liabilities, equity, income and expense. There's our revenue. Notice there's only credits because revenue only goes up in the credit direction. We are in cell AF 21 equals and we're going to scroll back over here way over here point to that 1,003 and enter revenue goes up again as it always does goes up up up to 7,004. 7,004 is here and we're going to post that same thing now to QuickBooks. And like I said, I'm going to do that as much as I can with the check register, but there's no cash affected here. So I can't use the check register in this case. So I'm going to use the form that is normally used by QuickBooks in order to record a receivable and revenue. That form is the invoice kind of like our bill to the customer. So we're going to go I'm going to do that by going to customers with a bunch of ways you can get in here, but and then create an invoice. And who's this invoice going to it's going to I'm just going to copy it. I'm not sure if we've dealt with this customer before. So put that there quick add and I'll keep the invoice number. I'm not going to fill it anything else on and we're going to say we do bookkeeping. That's our item number. That's what we do is I'm just going to say books just to keep it simple and we're going to say 1,300 is the amount. Now this cell looks a little bit more tricky to us when we go from theory to formats because we can't see the journal entry here. And QuickBooks, you know, is purposely not showing us journal entry. So people that do data entry aren't confused by deficits and credits. That's the point. But you know, in order for us to understand, we need to know what the journal entry is. And what's the journal entry? Well, the invoice itself means we're going to debit accounts receivable. It's going to be an accounts receivable assigned to the customer P Thompson. And then the other side of the invoice is going to be a revenue. That's what an invoice is. That's what an invoice does. That's the journal entry behind an invoice debit receivable credit revenue. Now if we sell inventory, then we have another piece to it, which is debit cost of goods sold and credit to the inventory account. So I'm sorry. I think I might have messed that up. So the invoice itself for a service company is a debit to accounts receivable credit revenue. If we deal with inventory, which were not in this case, we would have another piece in the invoice of which none of the numbers or the accounts will be represented dealing with the decrease in inventory and the recording of cost of goods sold. That is something we'll talk about at a later time. I'm going to save and close this and there it is. And then we'll go back here and see what happens 25 960 25 960 here. And then we're going to say that the other side was revenue 7400 7400 here. Net income is being shown on Excel of 5600 and 60 and QuickBooks. It's being shown in terms of revenue of 5600 and 60. Everything looks like it lines up. We only have one more left that we can do and then we have to stop. It's going to be really enjoy this last one here. I'm going to make this one green and go down. And now we got owner draws. So when we think about the draws, now the owner is taking out money for their personal use. So is cash affected? Yeah, it's going from the business to the personal checking to be later used in the personal account. And that's what we're trying to do, of course, is keep the business side of things separate from the personal side. Therefore being able to track our, you know, our goal in business, which is to generate revenue and our goal on the personal life, which is to budget and, you know, to live well in the budget or our stuff on that side as well. So if we keep those two separate, then it makes it easier to track both those things. So we're going to say 531. All right. Cash is going down. Cash has a debit balance. We need to do the opposite thing to make it go down. So therefore we will credit it. Copy cash. Going to put it on the bottom right clicking in age 27123. The credit will be for negative 1200. We're going to debit 1200 because every account has an equal number of debits and credits. That debit then will go to what draws. So who drew owner? So I'm going to go on the owner section, which is this light green. We're not going to put it to capital. We could, but we're going to make another account usually called draws, which is kind of like a contra equity account, an equity account, normal equity accounts having credit balances. And this one having a debit balance, therefore bringing down total equity. So we're going to copy draws, put it on the debit side. I'm going to indent the cash by going to the home tab, alignment, increase in denting. We can then post this last one draws first. Draws is the second light blue account because it's an order, assets, liabilities, equity. Going to those light blue accounts over here, assets, liabilities, equity. There it is. It's a debit in AE 14. AE 14 using a formula equals scrolling back over pointing to where we want to be 12,000 enter. There we have that brings this amount up. That amount will be posted here. We're out of balance by 12,000. Why? Because we haven't posted the cash side. So cash is here. We are in the credit side P 21 P 21 is going to equal going to point to that 12,000. When we hit enter, this is a debit. This is a credit. Those are opposites. Therefore cash is going to go down to 13 960. And there we have that back in balance here. There's the 13 960 there. We're going to post this last one to QuickBooks and that will wrap things up. So we're going to go to the checking account and I'm going to say as a 530. Make a check and we're going to say owner and it's going to be for 12,000. And I think QuickBooks gave us an account for draws. They called it owner draws. We have it and enter. And if we go to the trial balance, we're going to say cash 13 960 cash here 13 960. We're going to go down to draws 12,000. We're going to go to the draws here and we have 12,000. We have net income of 5,660 not impacted by the draws because the draws are not income or expense. It represents money taken out. It doesn't represent earnings or expenses. So we're going to go to profit and we got 5,660. That's what we have over here. So that's going to be our first part of this section here. We did the journal entries last time. We completed the month's worth of journal entries this time. That's all we're going to have for the first month of operations. Then we're going to go to the closing process. We're going to actually we're going to go to the adjusting process. You don't have this tab on your worksheet. We have it on those worksheets. Here's the adjusting tab. Then we'll create the financial statement and then we'll do the closing entries. Obviously, you can see it looks a bit different on QuickBooks because we'll still have to do adjusting entries. And when we do adjusting entries, we'll have to use actual journal entries. So that's one place QuickBooks still hasn't really, I mean, you can kind of avoid journal entries to do that. But that's really something where you need to understand journal entries and the adjusting process. The adjusting process is also something that the audit process often does or the review process often does. So if you go into public accounting, the adjusting process and a format such as this, the way this worksheet looks is something you'll work with. You may work with something a lot. I work with it a lot, something like this in order to post journal entries to a worksheet as well as if you do taxes and you're going to have to post the adjustment between the trial balance and the tax trial balance. This type of worksheet in Excel or some other software formatted like that is really, really useful. And so also note that when we make the financial statements, you'll note that QuickBooks generates it automatically. It is just a formula. So if we put the data in there correctly and we tell the data which accounts it should go to correctly, QuickBooks will generate the forms. What we need to know is, is the data in there correctly? Have we set it up correctly? And in order to do that, we need to know some accounting theory in order to make those types of decisions. So we'll show that and we'll also show the closing process and how QuickBooks kind of deals with the closing process and the pros and cons and the problems and pitfalls that do happen with a software like QuickBooks in terms of the closing process, in terms of rolling the accounts forward from month to month. So when you bring QuickBooks to your accountant at the end of the year and they're trying to figure out year to year month to month, the financial statements, we could have timing differences because of the way QuickBooks is set up. And those are some common issues that are worth understanding both from the student side, of course, and from the small business side. So yeah, like I said, next time, hopefully next time, we'll be doing the adjusting process or at least part of the adjusting process in a similar format and it will be great.